Global| Nov 27 2007Consumer Confidence Crumbled With Lower Home Prices
by:Tom Moeller
|in:Economy in Brief
Summary
According to the Conference Board Survey consumer confidence dropped 8.3% in November to a reading of 87.3, the seventh m/m decline of 2007 and the largest since September 2005. The decline was to the lowest level in two years. A much [...]
According to the Conference Board Survey consumer confidence dropped 8.3% in November to a reading of 87.3, the seventh m/m decline of 2007 and the largest since September 2005. The decline was to the lowest level in two years. A much lesser drop to 91.4 had been generally expected by economists.
The expectations index fell out of bed and posted a 14.1% m/m drop. It is off by a quarter during the last twelve months. Expectations for employment (more jobs) fell to a meager 10.8% looking for a rise, the least since the recession of 1990.Only 12.4% of respondents expected better business conditions, the least since 2000 while 18.7% expected an improvement in their income. That was down just slightly.
Plans to buy major appliances in the next six months improved slightly from a very depressed October level but the percentage intending to buy a home collapsed to just 2.5%, the least since 1994.
Just 2.0% of respondents planned to by a new automobile within the next six months, the least since 1974.
The present conditions index fell 2.2%, similar to the October m/m decline. The decline was to a level which was the lowest in about two years. Just 22.3% saw business conditions as good, the least since 2004, and 23.2% saw jobs as plentiful. A lesser 21.3% of respondents viewed jobs as hard to get.
The expected inflation rate in twelve months jumped to 5.7% from 5.1% in October, the highest expectation in two years.
According to the S&P/Case-Shiller home price index Composite 20, U.S. home prices fell 0.9% m/m in September. The decline pulled the y/y comparison to a negative 4.9% and since the beginning of this year house prices have fallen 3.8%.
Home prices in San Diego California were extremely weak with a 9.6% y/y decline as were prices in Miami Florida which fell 10.0% y/y. In Las Vegas home prices fell 9.0% y/y and in Los Angeles prices fell 7.0%.
More moderate, but still substantial, declines were registered in New York (-3.6% y/y), Chicago (-2.5% y/y) and Denver (-0.9%).
The index of just 20 U.S. cities and their surrounding areas is not adjusted for the quality or the size of the home. It fell five percent in August from a year ago.
| Conference Board (SA, 1985=100) |
November | October | Y/Y | 2006 | 2005 | 2004 |
|---|---|---|---|---|---|---|
| Consumer Confidence Index | 87.3 | 95.2 | -17.1% | 105.9 | 100.3 | 96.1 |
| Present Conditions | 115.4 | 118.0 | -8.0% | 130.2 | 116.1 | 94.9 |
| Expectations | 68.7 | 80.0 | -25.2% | 89.7 | 89.7 | 96.9 |
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
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